Rivlin, Domenici present deficit plan

A distinguished bipartisan group of budget experts unveiled a bold plan to curb the deficit and overhaul the tax code Wednesday, but it was hard to miss how many times the word “former” was used to describe its members.

The effort is headed up by former Senate Budget Committee Chairman Pete Domenici (R-N.M.) and former White House budget director Alice Rivlin, and included former governors, mayors, senators, congressional staff directors and labor union leaders.

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In other words, the group includes none of the current lawmakers and players who are expected to bitterly oppose one or another over the many painful choices that the deficit reduction plan would require.

Another important deficit-cutting commission that includes those incumbents — one convened by President Barack Obama —- is deadlocked between Democrats and Republicans, forcing the chairmen of the commission to issue their own report last week. And why were they so willing to be blunt? One was a former senator, the other a former White House chief of staff.

The Rivlin-Domenici plan would be divided about 60-40 between spending cuts and tax increases, and reduce the budget deficit by $5.9 trillion or an average of $650 billion a year over the next nine years. By fiscal year 2025, the deficit reduction would be $14.5 trillion.

The plan would stabilize the national debt within three years at about 70 percent of annual gross domestic product, and bring that down to 60 percent by 2020. Its most controversial aspects are a new 6.5 percent national sales tax, a revamping of Medicare in 2018, and sizable benefits cuts and tax increases for Social Security.

Rivlin and Domenici convened the group under the auspices of the Bipartisan Policy Center, a think tank promoting moderate views, mostly on economic policy.

The plan cuts deeper than the one proposed last week by Erskine Bowles and Alan Simpson, chairmen of the president’s commission, who called for $4 trillion in cuts through 2020. Bowles and Simpson divide their plan between 75 percent spending cuts and 25 percent tax increases, and propose curtailing Social Security benefits by raising the retirement age for full benefits, an approach that Rivlin and Domenici have avoided.

Rivlin conceded that the new sales tax, the Medicare changes and Social Security reforms would be controversial, but she said that “bold action is needed.”

Commission member Robert Novelli — the former chief executive of AARP — said he believed that seniors who have strongly opposed Medicare and Social Security reforms would come to embrace them for the sake of their children and grandchildren.